The Wisdom Of Crowds: Why The Many Are Smarter Than The Few And How Collective Wisdom Shapes Business, Economies, Societies And

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As James Surowiecki explains it, the problem with conventional wisdom is twofold. First, it's conventional, with all the hidebound, inside-the-box traditionalism the word entails. Second, it isn't, as it turns out, wisdom. Surowiecki, who writes The New Yorker's weekly business column, piles up example after example of the ineffectiveness of sacrosanct methods of decision-making in his enlightening book The Wisdom Of Crowds.

Take NFL coaches' frequent willingness to kick field goals on fourth down in enemy territory, when mathematical analysis shows that they're usually giving up points by not going for the first down. Or the space shuttle Columbia mission team's failure to question whether a foam strike on the heat shield was a serious problem, and whether anything could be done about it. Take the CEOs of nearly every major corporation, whose outrageous salaries and perks are justified on a "solitary genius" theory of decision-making that has no basis in observed fact. Take them all, and replace them with the decision-making mechanism that outperforms every other, every time: groups composed of people of differing ability with diverse information sources, given real power to make changes.

Surowiecki has written columns on some of these ideas and examples, notably Google's powerful ranking system and a remarkable experiment wherein capuchin monkeys passed up benefits in a pique over others unfairly getting more. The book isn't recycled material, however. Each chapter assembles a concise, up-to-date treatise on the essential problems facing decision-makers and collaborators: Do hierarchies or decentralized structures work better? How do we coordinate our actions with others whom we don't control? When can we be reasonably sure that following the crowd is a good idea, and when is it beneficial to the individual and the group to be a maverick?

The book ends with the biggest decision-making problem of all: democracy. Surowiecki shows how often the self-interested agents of economic theory fail to describe the real world, but he also shows that, when constructed correctly, markets do aggregate individual decisions to the benefit of all. Without widespread trust in its reliability, however, a system is doomeda possibility raised by the dissenting judges in Bush v. Gore. Surowiecki's illustration of a system where there is no trust and therefore widespread dysfunction sends shudders down the spine: Italian club soccer players, certain that the officials are corrupt, falling to the turf in feigned injury at every opportunity.